No, I don't think management should pursue legal action against the former employee. Simply deduct the amount from their full and final settlement, and that should suffice. If the deducted amount is less than the outstanding recovery amount, as usual, send an HR representative to the employee's residence to collect the remaining sum. If this is not feasible, then send a formal letter instructing the employee to return company property by a specified date. Failure to comply may lead to legal action being taken. However, in most cases, when an employee leaves the company, the HR department or the concerned authorities ensure the return of company property. Employees are typically aware that company property should be returned, as retaining it could harm their reputation and future job prospects in the small world of business.